The German Landesbank Baden-Württemberg (LBBW) is reported to have said it would not take part in a key new cross-sector working group to push for co-operation and pooling of business between the 11 Landesbanken. Siegfried Jaschinski, LBBW's deputy chief executive, told the FT: 'We have no desire to share our business with rivals. In any case, this initiative is little more than window-dressing.'
The Landesbank sector is struggling to come to terms with the phase-out of state guarantees in July 2005. According to a LBBW study, the public-sector issuers group is facing the greatest challenge in terms of its funding situation since its founding. The elimination of the maintenance obligation (Anstaltslast) and guarantor's liability (Gewährträgerhaftung) in July 2005 will also particularly acutely affect institutional investors in AAA/AA instruments, who will have to modify their investment strategies accordingly.
LBBW signalled yesterday it was confident of securing an AA range rating from Standard & Poor's, when the agency publishes its analysis of unguaranteed ratings in July. Most Landesbanken are expected to be in the BBB range. 'For many Landesbanken, it will not be a question of how much you have to pay for your money but whether you can get any money at all,' Mr Jaschinski said.
LBBW Press release
© Graham Bishop
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